Costs and penalties

Any award of costs against a party is no longer required to reflect the party’s ability to pay. The tribunal may make wasted costs orders against parties who behave improperly, unreasonably or negligently.

Since 6 April 2014, under section 16 of the Enterprise and Regulatory Reform Act tribunals have been able to order employers who lose employment tribunal cases to pay a financial penalty where there have been ‘one or more aggravating features’. Unfortunately, the meaning of ‘aggravating feature’ is not defined so it will be up to tribunals to determine what they are. The government’s guidance indicates that an honest, one-off mistake is less likely to attract a penalty than the continuous repetition of the same mistake. Equally, a small company without dedicated HR support will be less likely to attract a penalty than a large company with an HR department. However, malicious behaviour is likely to attract a penalty. It is possible for the tribunal to impose a fine of between £100 and £5,000 even if it does not make a financial award to the claimant.

If the tribunal orders that the employer should pay a financial award to the claimant then the fine is 50% of the award, subject to a minimum of £100 and a maximum of £5,000. The tribunal must take into account an employer’s ability to pay and the amount payable will be reduced by half if it is paid within 21 days.